Fed Issues Gift-Card Rules

The U.S. Federal Reserve announced final rules Tuesday pertaining to how and when fees can be assessed to inactive gift cards.

The rules also require that gift-card issuers provide consumers with the exact terms and conditions, particularly regarding card-expiration dates.

“Concerns have been raised regarding the amount of fees associated with gift cards, the expiration dates of gift cards, and the adequacy of disclosures,” the Fed said. “Consumers who do not use the value of the card within a short period of time may be surprised to find that the card has expired or that dormancy or service fees have reduced the value of the card.”

Under the final rules, three conditions must be met if gift-card issuers want to charge inactivity or service fees. Fees can be applied only if the consumer hasn’t used the card within a one-year period, if there’s no more than one fee charged a month, and if consumers are made aware of such fees.

The Fed’s rules would cover retail gift cards and network-branded gift cards, which are redeemable at any merchant that accepts the card brand.

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